What Lies Ahead For Suncor Energy (SU) In Q4 Earnings?
Zacks Investment Research | Jan 30, 2020 09:19PM ET
Suncor Energy Inc. (NYSE:SU) is set to release fourth-quarter 2019 earnings results on Wednesday Feb 5, after market closes.
The current Zacks Consensus Estimate for the to-be-reported quarter is pegged at earnings of 53 cents per share on expected revenues of $8.10 billion. There has been no change in estimates for the bottom line over the past seven days.
Let’s delve into the factors that might have impacted the company’s performance in the December quarter.
Factors to Impact Q4 Results
Suncor Energy’s third-quarter operating earnings from the downstream unit decreased to C$668 million from the year-ago figure of C$932 million due to lower refining margins. Refining margin was C$28.35 a barrel compared with C$34.45 a year ago, a trend that most likely continued in the fourth quarter as well.
However, the company witnessed total upstream production in the third quarter at 762,300 barrels of oil equivalent per day (Boe/d), up 2.5% from the prior-year level of 743,800 Boe/d. This ramped-up output was backed by robust operations in Fort Hills, Hebron and Syncrude projects, which are expected to have supported the company’s growth momentum and earnings in the reported quarter.
Following the Petro-Canada acquisition, Suncor Energy became one of the largest owners of oil sands in the world. The company’s newly-gained oil sands properties to supplement its operating portfolio in northern Alberta make it the leading producer in the region where its reserves come a close second to Saudi Arabia. The oil sands assets of the ‘new’ Suncor Energy promises long-term production growth as prices show signs of recovery from the recession-driven lows and depleting conventional reserves.
While significant activities at the principal projects are expected to have boosted Suncor Energy’s fourth-quarter upstream earnings, soft year-over-year refining margins might have affected the company’s downstream results.
What Does Our Model Say?
The proven Zacks model does not conclusively predict an earnings beat for Suncor Energy this time around. The combination of a positive Zacks Investment Research
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